COMMISSIONER OF INCOME TAX Vs. YOKOGAWA INDIA LTD

JUDGEMENT

(1.) THE Revenue has preferred this appeal challenging the order passed by the Tribunal which upheld the view of the Appellate CIT that the addition made by the Assessing Authority on account of provision of doubtful debts claimed by the assessee is not proper.

(2.) THIS appeal pertains to the asst. yr. 2004-05. The assessee is engaged in manufacturing, trading and distribution of process control instruments and undertaking related services and had furnished its return of income for the asst. yr. 2004-05 on 1st Nov., 2004 declaring a total loss of Rs. 1,07,23,313. The return was processed under S. 143(1) of the Act and was subjected to scrutiny. During the scrutiny, the claim of deduction under S. 10A was computed to nil besides effecting certain additions and the order came to be passed on 26th Dec., 2006. Aggrieved by the said order passed by the assessing authority, the assessee preferred an appeal raising nine grounds. One such ground raised was the amount added in respect of provision for doubtful debts of Rs. 10,84,33,130 in computing book profits under S. 115JB of the Act (book profits) by treating the same as the provision for meeting liabilities other than ascertained liabilities. The assessee contended that the debts due to the assessee were provided as doubtful debts and the adjustment provided under S. 115JB is only in respect of provisions made towards unascertained liabilities. Therefore the assessing authority was not justified in facts in adding back the provisions,

(3.) THE appeal was admitted to consider the following substantia! question of law :